California's New School Finance System
On July 1, 2013, Governor Jerry Brown signed into law the 2013-14 state budget package and instituted a new Local Control Funding Formula (LCFF) that overhauls how California funds its K-12 schools.
The new funding formula replaces the old system of “revenue-limits”—general-purpose funding from the state, which was based on complex historical formulas and made up approximately 70% of the district’s budget—with a per-student base grant that varies by grade span.
In addition, districts receive 20% more money for high-needs students, based on unduplicated counts of low income, English learner and foster youth students, and even more for schools with large concentrations of these populations. This additional funding for high-needs students replaces most of the state’s categorical programs—funds the state previously provided to school districts for specific purposes such as summer school programs, school safety or helping certain student populations.
Unlike categorical programs that come with restrictions on how the money can be spent, schools will have broad discretion over how they use the base grants they receive under the new system. The extra money they receive for their high-needs students must (as written in the law) “increase or improve services for unduplicated pupils in proportion to the increase in funds apportioned.” However, the State Board of Education is still working to define how much latitude districts will have over those additional funds and whether the money can only be used to benefit the high-needs students or if it could support programs that improve the school as a whole while also benefitting the targeted students.
The transition to the new formula begins with the 2013-14 school year. Full implementation of the new funding formula is slated to take eight years. Although the majority of school districts will receive more funding under the new formula, districts that were already receiving more funding than what they would get under LCFF are protected by a “hold harmless” provision specifying that no district will receive less state aid than it received in 2012–13.
Under the new funding formula, school districts will also be subject to new rules for transparency and accountability, which include creating—with input from parents and the community—and adopting a Local Control Accountability Plan (LCAP) that lays out how the district will spend the funds and its goals for improving student outcomes according to eight priorities set by the state. Districts that fail to meet their goals and improve student outcomes will receive help through a new system of interventions.
The State Board of Education and the California Department of Education are still working out many of the details—such as the template schools will use to create their local accountability plans—and developing new systems for identifying whether schools need help or intervention and for providing that support. (Click here for a timeline of major decisions and milestones for the first four years of LCFF implementation.)
For a more detailed explanation of the new system, please see:
California Department of Education’s LCFF web page
An analysis of the new funding system by the non-partisan Legislative Analyst’s Office
A summary of K-12 funding in the 2013-14 budget from the Department of Finance
What this means for the reports on Ed-Data
At present, there will be no change on Ed-Data. As the California Department of Education develops new reports to align with the requirements of the Local Control Funding Formula—such as tracking unduplicated counts of low-income, English learner, and foster youth students—we will update the relevant reports on the Ed-Data website.
More changes ahead
In addition to the new finance system, California is beginning the process of transitioning to a new set of academic standards, known as the Common Core. This will result in significant changes to California’s testing and accountability systems. We will update the Ed-Data website as new reports and data become available. If you have questions about information on Ed-Data, please contact us.